Null

Financial Planning tools
June 2009
Authors: Mark Loosmore

Nigel Smith
Mark Thelwell
th
Financial Planning Tools 20 June 2009
Authors: Mark Loosmore, Nigel Smith, Mark Thelwell Page 1 Version 1.0
This document contains proprietary information of AT8 Group Limited and is not to be disclosed
or used except in accordance with applicable agreements.
© 2009 AT8 Group Limited. All rights reserved
TABLE OF CONTENTS
1. Introduction .......................................................................................................................................... 3
2. PlanLab .................................................................................................................................................. 4
3. Dynamic Planner ................................................................................................................................... 8
4. Voyant ................................................................................................................................................. 11
5. Morningstar ........................................................................................................................................ 14
6. Truth.................................................................................................................................................... 17
7. O&M .................................................................................................................................................... 19
8. IntelliFlo .............................................................................................................................................. 21
9. Focus ................................................................................................................................................... 23
10. 1st The Exchange ................................................................................................................................. 27
11. ShareScope.......................................................................................................................................... 29
12. The tools behind the scenes ............................................................................................................... 31
th
1. Introduction
There is no doubt that times are hard in the Financial Services market – as elsewhere - and in such
times we often see a dramatic cut back in IT investment. Many will remember the difficult times in
2001/2002 when IT spending virtually froze as the stock market crashed after 9/11.
On the positive side, the current recession and stock market performance does not yet appear to
have caused such stagnation in IT spending. Indeed, there are a few areas such as Financial Planning
tools that help distributors provide good, effective and holistic financial advice, along with CRM that
are looking positively buoyant.
The demand for such tools has been stimulated by a number of key drivers. First the FSA has put a
great deal of emphasis on Risk Management - assessing attitude to risk, communicating risk and
matching investment portfolios to risk. One way to do this is through the sales aids, analytical and
modelling tools that come with such financial planning solutions.
Added to this is the desire by many to move to a fee-based model to both increase the inherent
value of the IFA businesses and to meet the implications of RDR (now RDIP). To justify these fees,
clients expect holistic advice, including the production of professional, clear and accurate financial
plans. It is important to stress that we do not believe that these tools will replace the knowledge
skill and experience of good advisers. However, they can be used to support advisers, paraplanners
and admin staff, working as a team to improve the efficiency of their time and cost management in
order to deliver value for money. We are seeing a number of advisers charging sizable sums of
money for reports generated from these tools. One tool, PlanLab claims 12% of their fee-based
users charge more than £1,000 for a report; while 31.4% charge from £500 - £1,000’.
With this in mind, we compiled this report to review the various ‘Planning’ tools that aim to help
Advisers with the service they are providing to their clients.
We aim to provide some descriptive and commentary narrative as well as a summary matrix
allowing advisers to compare and contrast the solutions to help identify the tools that may be best
for their own business model, functional needs and budgets.
That having been said, this document does have its limitations and business owners and managers
will have differing operating models, as well as different needs and objectives. If more information
and help were needed to support a review of what options may be suitable to a particular business,
then AT8 would be happy to arrange a consultation and review.
th
2. PlanLab
PlanLab comprises a suite of financial planning modules that originated in the US, but this has now
been tailored and marketed in the UK by BMC. Its US heritage and user base is substantial with
65,000 users, including clients such as AEGON, Aviva and AXA. Its UK user base is currently much
more modest, and while BMC won’t release exact numbers we believe this to be in the low
hundreds.
There are five products within the PlanLab suite, starting with a concept tool or ‘Light touch’ tool
called ‘Life Goals’. Life Goals is a simple application that takes a snapshot of data about a client and
provides a high level, but professional report on the client’s current position and potential
requirements. It covers Protection, Disability, Long-term care, Education and Retirement planning.
A professional report is generated, including a one-page visual overview of where the client
currently stands in relation to each of their financial goals, along with what needs to be done to
achieve these. The one page summary can then be accompanied by the detailed recommendations
and the underlying ledgers that drive the calculations can also be included if the adviser wishes to do
so. The presentation is uncomplicated, clear and eye catching. Life Goals retails for £45 a month per
user and because the service is h and charged from the US there is no VAT on top of this price.
Life Goals – the entry

level system from
PlanLab – cover key
planning areas including
Survivor needs,
Disability, retirement,
education and Long
Term Care
th
Life Goals is ideal for advisers needing a simple tool to analyse one or more specific need areas at a
competitive price. The plans can be produced quickly and the output is professional.
Life Goals reports are

clear and professional
However, Life Goals is not a truly holistic planner, so for more comprehensive capability BMC market
their top-end product ‘Financial Strategies’. This tool covers all the needs areas within Life Goals,
but adds Debt Analysis, Asset Allocation, Estate Planning, Life-time cash flow analysis along with
Monte Carlo (stochastic) analysis modelling capability.
th
The more
sophisticated financial
strategies module
includes asset
allocation tools
Added to this, it allows the advisers to build multiple scenarios for a client’s future financial positions
and provide side-by-side comparisons. By using an iterative approach to comparing different
positions, advisers can help ensure their clients take the right financial route. Although ‘Financial
Strategies’ does allow an iterative approach to modelling, it requires the report to be re-run to see
the effect. As a result, it stops short of some of its competitors solutions that allow the interactive
iterative analysis to change a single factor and then see the immediate effect on the client’s financial
position.
The biggest shortfall with all the PlanLab products is the fact that they are currently standalone
solutions and do not currently integrate with data available from other solutions such as the POS or
back-office. Much of the information needed to drive the report creation may already exist within
the other Adviser systems and so the lack of an integrated approach requires data to be re-keyed.
That having been said, it is a comprehensive, proven and professional suite of products that has
been modified effectively for the UK market. The price point is quite aggressive and the availability
of an entry level system at a further reduced price point is likely to be welcomed and will suit the
requirements of many in today’s market.
th
th
3. Dynamic Planner
The move to fee-based business models and the focus on understanding and communicating risk has
driven many advisers to look for tools to help support them in generating accurate, professional
financial plans. In some cases, advisers are procuring stand-alone tools, whilst others are utilising
tools that are integrated with the wider Point of Sale (POS), or back-office systems used within their
company. Some also rely on tools sitting on insurers extranets and there are some interesting
developments in this area. Regardless of which route they take, Distribution Technology’s Dynamic
Planner product may well be the tool at the heart of one of these system.
Dynamic Planner is a web-based financial planning tool, allowing the creation of professional plans
quickly and easily. It is placed uniquely, in that it is the only tool that an adviser can buy as a
standalone tool (£85 per user per month) or obtain it as part of a wider POS solution called DPOS.
Dynamic Planner also sits as a third party tool in systems such as Intelligent Office from IntelliFlo, or
via Insurers extranets such as those from Scottish Widows and AEGON Scottish Equitable or can be
found sitting on Platforms such as Cofunds and BNP. Through this combination of deployments,
Dynamic Planner claims to have 20,000 users, although there is likely to be some double counting
within this number.
The tool covers the key need areas of retirement, investment, mortgage (although at a very high
level), protection and estate planning. It bases its analysis on a strong underlying financial model
that has been proven in the market over the past 6 years. Interestingly, Distribution Technology
recently ran a series of backdated financial scenarios through the tool to see how effectively the
modelling outcome tolerance limits would predicted the current financial turmoil. They have gained
an apparently positive set of results that are currently being audited before being released to the
market. They believe this will be a further endorsement of the financial model that has seen it being
used by the FSA.
The tool produces a good level of output, and although the reports are not as modern looking as
some of their competitors, they are comprehensive and professional. The report includes a series of
traffic light graphics highlighting progress towards meeting individual needs, and the report
incorporates graphs and diagrams to help illustrate the financial plan that has been created.
th
Dynamic
Planner reports
includes a series
of traffic light
graphics
highlighting
progress
towards
meeting
individual needs
Distribution Technology also provides an Attitude To Risk (ATR) tool which can base the risk using
five, 18 or 24 questions. In addition, they have also released a new series of functionality called
‘Tasks’ aimed at the adviser who just wants to investigate a single need area without the
requirement for a full financial planning process. The new function is a welcome addition, but
currently is only available to corporate clients and not to the wider user base.
Dynamic
Planner’s –
Risk Profiler –
illustrates
risks clearly
to the end
consumer
Dynamic Planner supports the ability to run an iterative process of building multiple financial plans
that can then be compared and analyzed. These iterations do not include the interactive nature of
changing a single item on the plan and seeing the immediate impact reflected on the screen.
th
Instead, it results in the rework of each plan and re-running of the report. However, as the tool is
designed to be used back in the office, rather than in front of the client, this may be less of an issue
than it may appear.
Dynamic planner is one of the more expensive products on the market (although by no means the
most expensive) but it does haves a strong pedigree and scores highly on usability. Definitely a
product worth considering if budget is not an issue.
th
4. Voyant
For a company with a small UK presence (only 2 UK employees), Voyant created a bigger splash than
might have been expected when they launched into the UK market last month. You can find lots of
press about them, chatter on social network sites like twitter and commentary at industry
conferences. Perhaps part of the reason for such an early impact is that you can download a free 30-
day trial of the software from www.planwithvoyant.co.uk and get to experience what it is like to use
the application. I duly did what allegedly tens of thousands of people have done and downloaded
the application, which enabled me to gain some user experience before meeting the Voyant team.
The first impressions were really good. Indeed, of all the tools I have seen as part of this exercise,
Voyant is the most graphically appealing, with a very modern look and feel. I love the way key life
events can be simply dragged from a menu onto the life-cycle chart, making the data collection
exercise far more interesting and interactive. One complaint is it is a little American in appearance
(a bit brash and loud) and the Union Jack embedded in the logo only serves to reinforce that its
origins are not from these shores.
It is probably worth taking a little time to look at its origins as I think they do define the character of
the product. It was launched in the US last year after a two year development project and so
unsurprisingly benefits from a modern technology architecture and is very up to date in its look and
feel. Despite having been ‘Anglicised, the odd Americanism does still appear within the product (for
example saving for ‘sweet sixteen’ parties– not that common an event in the UK). That having been
said, the team has spent the last 9 months working to ensure the product is fit for purpose in the
UK, including UK Tax requirements. To do this, they commissioned specialist UK tax experts and
from my initial look they seem to have done a pretty good job. The product has been written in the
US and is supported from there too. Whilst this may present some issues, if properly managed, they
should not be insurmountable.
The tool has a reasonable coverage of needs, but it is still relatively new and has room for further
developments. For example, there are no Attitude to Risk questionnaires, although we understand
that a preferred risk questionnaire can be configured into the tool if required.
The investment planning area lacks coverage of Estate Planning, although we have been told that
this will be added in the next few months. It does have an asset allocation capability, with a
stochastic model based on the Markovitz Portfolio Theory, but the market assumptions that the tool
relies are being tested and so remain unproven at this stage. It also lacks integrations to the other
current systems in the market, which, like a number of other products, means rekeying data which is
not the best use of time. Voyant are keen to address this and has published integration APIs to
enable connectivity to other applications so I expect things will improve in this area soon.
The needs areas that it covers are done quite well, with easy data capture and logical analysis tools.
Included in this is an interactive ’what if?’ capability which shows the effect of changes dynamically
in real time and allows a clear side-by-side graphical comparison and analysis of different scenarios.
th
Voyant is a
very
graphical
tool
enabling
clear, side
by side
analysis of
scenarios
As mentioned earlier, this is a good-looking tool and one you could feel comfortable using in front of
clients. Voyant are going one stage further and using this in a web 2.0 type world where consumers
are invited to use this tool on the web for themselves and when they have had an initial play with
the tool, investigating their own financial position, they can then permit an adviser to share the data.
As a result, the adviser can pick up a part completed case and complete the advice process for the
client - online or face-to-face. As a consumer, this would really appeal to me and potentially many
others of my generation.
It is a new product and I think Voyant have not yet fully developed their go to market strategy and
pricing. However, from what I have seen, it is a product with great promise if it can get good early
traction in the market.
th
th
5. Morningstar
As Morningstar’s Adviser workstation is more narrowly focused in what it provides compared to the
other tools we have looked at - it doesn’t cover the same breath of need areas other do. For
example, it doesn’t do tax, or estate planning, nor does it cater for protection planning . What it
does do is provide detailed investment planning – measuring risk tolerance, forecasting, asset
allocation, portfolio construction and portfolio monitoring - and it does this extremely well.
Morningstar is a sizable company and much bigger than the other companies we have reviewed.
Founded in 1984 it was floated in 2005 and now boasts revenues in excess of $500,000 and has
2,200 employees. It has gained a strong user footprint in the market with 200,000 advisers using its
Adviser Workstation product worldwide. In addition, Morningstar is also strong in providing
research material and consultancy services. This extent of investment capability directly benefits the
Adviser Workstation clients as the research is provided free to all users.
Morningstar’s penetration of the UK market has been slower than in the US, with a current user base
around about 500 here in the UK. However, this figure is somewhat misleading as they also have
various modules of their tool available on some of the major platforms in the market, including
Cofunds, Transact, Accentric and Fidelity Funds Network.
Looking at the different modules of the tools themselves, I would say the Risk Tolerance tool is
adequate, but not as good as some of the others. It has seven questions to assess the attitude to
risk (ATR) and the ATR can be either assessed generically across all need areas, as well as adjusted to
reflect different attitudes against different goals. As a nice touch, it can also be modified to reflect
life-stage changes, for example as clients approach retirement -, a process Morningstar refers to as
defining their ‘glide path’. I would like to have seen configuration options to enable a shorter or
extended Risk Profiling process and perhaps a seamless integration to a third party risk-profiler as
well.
The portfolio construction is extremely impressive. The tools can drill down to a level of detail far
beyond anything we have seen so far in the investment planning area. Portfolios can be constructed
and customised from tens of thousands of funds broken down into 23918 Offshore funds, 14566 UK
RFS, 10428 UK Individual Pensions, 7327 UK Life Funds, 749 UK Pooled Pensions , 451 UK Investment
Trusts, 31,660 Global Equities, 2890 UK Equities, 31,000 Global Index Database. In other words the
detail is impressive by anyone’s standards.
Various asset allocation models can be used, but they default to the Ibbotson Models, provided by
Ibbotson Associates sister company to Morningstar and asset allocation experts. The tools and the
graphical illustrations used here are clear and effective. The level of detail behind each fund is
impressive, ensuring that asset are categorised accurately, aiding effective asset allocation against
agreed ATRs.
th
Morningstar’s
asset allocation
is by default
based on the
Ibbotson
Models
The report generation capability is equally impressive. There is a wide range of template reports,
but the construction and content of the end client report is under the user’s control, choosing the
standard sections they want and tailoring the text if required. Morningstar say they have a design
team of 50 that spend their time creating effective graphics to explain complex issues – something
that could be seen in the quality of the client reports produced. The graphics used are clear and
understandable and the look and feel of the report is very appealing. It is a bit like the Audi A8 –
professional and slick yet understated - not too flash and gimmicky like some reports we have seen.
Cashflow
forecast is well
presented
We have talked much in past articles for the need to have a degree of integration with other IFA
tools to avoid rekeying of information. Given the investment focus of Morningstar it is no surprise to
see that the focus of these integrations has been with the Platforms. The major platforms are either
th
embedding their tools within their own solutions, or are supporting integration links to the
Morningstar tools. We would like to see them widen their focus and integrate with the major back-
office providers too.
In summary if you are looking for a more holistic planning tool to address a wide range of lifetime
goals for your client – this is probably not the tool for you. However, if you require a tool to help you
effectively manage your clients’ portfolios, this is a very strong candidate. At £166 per user per
month, it is one of the more expensive tools we have reviewed, but because of the extras you get
with it, the price may be justifiable. The company is clearly ambitious and so we expect Morningstar
to grow its market position over the coming years.
th
6. Truth
Truth was first launched in 1984 as a DOS based tool and over the subsequent years has built a loyal
following leading to today’s position of having over 500 firms using the tool.
Truth hasn’t stood still during this time and remains a fresh looking tool, albeit based on an older
technology infrastructure than some of its more modern online competitors. Its offline nature may
concern some but it will increase the portability of the tool allowing advisers to take it to clients’
homes without the need for mobile communications technology. The functional coverage is
extremely comprehensively, with detailed, adjustable assumptions driving every financial item. It is
pitched at the top end of the price scale (£197 per month for the first user and £75 for each
additional licence) but its functionality is rich.
It uses a clear cashflow analysis process, showing current and future cash surpluses or shortfalls, to
help analyse the effect of retirement, protection, mortgage, education and estate planning needs.
Different ‘catastrophe scenarios’ such as death or disability for one or more of the partners can be
applied and compared, or new individual scenarios can be built to model the effect of different
changes in circumstances, in effect to run ‘what if’ scenarios. Through this modelling detailed
financial plans can be evaluated and agreed with the customer supported with clear
recommendations in the report.
Truth uses a clear

cashflow analysis
process, showing
current and future cash
surpluses or shortfalls
Importantly, it does provide a level of integration to some other tools in the market including their
own back office system, as well as third party products such as Adviser Office and Plum. We would
like to see further integrations to the likes of IntelliFlo in the future, but as people try to become a
‘one stop shop’, there may be some reluctance from different parties to ‘partner’.
Truth is undoubtedly a powerful tool in the right hands. However, it is also complex and not for the
faint hearted. The level of detail that a user can go into is impressive, but can also be daunting.
Prestwood has started to address this by adding a nice Wizard for initiating the data collection
th
process in a clear and simple way, but once the user leaves the Wizard, the user interface becomes
complex with multiple levels of navigation available at any one time. For a power user this is fine,
but for a casual or inexperienced user it will be complicated and potentially off-putting.
The only real area of disappointment for us was the lack of true investment planning tools.
Prestwood are at pains however to state this is not an omission, and has been done on purpose.
Their belief is that Truth is a Lifestyle Financial Planning program, designed to be used in the client
meeting. During a meeting, they claim the client is not interested in whether Standard Life is better
than Scottish Widows, or if this fund is better than that fund. It’s all about what the client wants to
do with the rest of their life. Through their approach they aim to keep the focus on the client which
is what makes for an enjoyable Financial Planning meeting. While I accept their position to a point, I
believe some clients will want to use an Attitude to Risk questionnaire and Asset Allocation tools
which are included in other applications. An Attitude to Risk Questionnaire is available with Truth
but this is from a third party and incurs additional cost. Asset allocation facilities are not available at
all, although we understand them to be available in the more expensive ‘Professional’ Prestwood
product.
The real winner for Truth was the depth of knowledge of the team at Prestwood. They have a small
but loyal workforce, many of whom have worked there for a long number of years and they really
know their product and the financial planning process inside out. Better still, they impart this
knowledge to new clients through an inclusive (free of charge) 4 day training course. This training
course is highly recommended at teaches as much (or more about financial planning as it does about
the tool itself.
The ‘Grand Daddy’ product comes at a ‘Grand’ price but has the wisdom and depth you would
expect.
th
7. O&M
In the report so far, we have reviewed some of the holistic specialist financial planning tools These
applications have tangible benefits as the industry moves towards fees and battles through the
tough market conditions. These tools have been varied and interesting from both a business and
software perspective. Some have been feature rich and colourful, whilst others have been
functional but bland.
Whilst there are real attractions and benefits from the more ‘sexy’ looking applications, it should not
be at the expense of functionality and intellectual processing support that these tools are designed
for. Last week we had the opportunity to have a demonstration of ‘Pensions Profiler’, one of the
suite of products from O&M systems. Pensions Profiler is focused on the world of pension
switching, which while not as glamorous as holistic financial planning, is a significant – albeit niche-
revenue stream for many IFAs and a growing one. Indeed, in a recent survey of IFAs, only 11% said
they were not involved in pensions switching, while 30% of respondents saw this as a growth area
and only 2% saw this as a shrinking service.
Pensions Profiler itself is not the most attractive looking application we have seen – it is rather two-
dimensional and conservative in appearance – especially when contrasted to the colourful holistic
planning tools like Voyant. But, and it is a big BUT, it is functional and robust, showing the
knowledge and expertise of its creators at O&M and as such, provides a real value add to any IFA
looking to include pensions switching as part of their business model.
Pensions Profiler
isn’t as pretty as
the other tools
reviewed but has a
depth of
functionality that is
impressive
Profiler provides Lipper sourced data on all the different pensions funds showing past performance
for all, or a selection of funds to help with research and comparisons. It will compare performance
for over 10,000 funds and produce switching reports for clients including old-style personal
pensions.
th
Pensions switching has of course long been under the spotlight of the FSA and was more recently the
subject of a thematic review published in December 2008. Having the rigour and surety of using a
tool such as Pensions Profiler is becoming essential to show a compliant process with the correct
outcome for customers. O&M have taken this compliance angle a step further and built the FSA
template for pensions switching into their system. This is the template that the FSA themselves used
when carrying out their review and many IFAs are already adopting the template into their own
processes. However, to have a tool that helps automate the part competition of the template (filling
in the tables at the back of the template from existing data) is a real bonus as both a compliance tool
and a time saver.
Another nice new feature O&M have put into Pensions Profiler is that they have linked up to The
Exchange to provide accurate quotations (where available from Providers) and enable new business
processing (again, where available from Providers). Access is easily triggered from the system and in
the case of quotations with no additional data entry. I have always been a fan of any system that
reduces re keying of data and that streamlines the sales process, so O&M and The Exchange are to
be applauded for their efforts here. My enthusiasm for this function is a little diminished as the
system is not yet supported by all the Product Providers across all their funds. Indeed, the fund
coverage for quotations is running at about 50-60% and so we would encourage the Providers to
extend their electronic reach if at all possible.
While I do like Pensions Profiler overall, despite the use of graphs to compare performance, the
outputs are rather flat and grey (but good for advisers who don’t use colour printers). O&M have
made no attempt to produce a suitability report, so the document is most likely to be used as an
appendix to their own suitability report. As such, it is designed to support the advice given to the
client, but they would probably need help in understanding some of the complex issues covered.
Pensions Profiler retails at £45 per user per month that is made up of a core product licence of £40
and an additional £5 client access licence. If more than one user is required but not concurrently
then the IFA need only buy more Client Access Licences at £5 per user - a refreshingly pragmatic
approach.
In summary, Pensions Profiler is a useful application worthy of consideration by any IFA involved in
pensions switching. Don’t expect a dynamic or exciting look and feel, but you will get solid data to
base client recommendations on and help you follow a compliant path to do so.
th
8. IntelliFlo
I have written about many of the leading Financial Planning tools on the market over the past weeks.
I have been impressed at the quality of most of the tools and the real business benefits they provide
their users. However, and it is a big HOWEVER, I have been consistently concerned that the tools are
largely standalone and fail to integrate to other key tools in an IFA’s technology infrastructure.
Typically an IFA would already have entered huge amounts of the data into their Back-office and/or
Point of Sale systems but are then usually expected to re-enter this data into their planning tool.
Thankfully the business benefits of using the tools have, for many, justified this extra effort. This
however does not make it a business process I would recommend to anyone if an integrated
alternative exists. To be fair, some of the tools do have integration points– Truth from Prestwood is
probably the most advanced with integration to both 1st and Plum, but it still leaves some big user
groups operating without any integration.
With this in mind, I was pleased to see IntelliFlo launch their planning tools, sold as an extension to
their Intelligent Office and so fully integrated. The first release is not pitched as a full cash flow
analysis tool, but is aimed instead at what they call describe as ‘product planning’. It takes a client
need (limited to Investment or Pensions in the current version) and analyses that using some of the
techniques and processes derived from financial planning methodologies.
So how does that work in practice? Well the adviser will have completed the factfind in Intelligent
Office (IO), including goal setting and ATR. The default ATR is based on Towers Perrin financial
model covering up to 14 questions. However, the ATR can be configured to ask any number of
questions, to change the ratings derived and the asset models they drive. The ATR can be run at
either an overall client level or for each need area. It can also be overridden for each goal, but
provides an audit trail if this is done. Added to this, the ATR can also be varied by time to allow for
life-stages.
The forecasting part of the tool identifies how close to the goal the client is and then allows the
adviser to add the necessary investment to address this goal. A suggested asset allocation is
produced using the Towers Perrin stochastic engine, with a forecast of possible returns. A number
of scenarios can be set up to see their effect and any changes made can be seen dynamically in the
graphs on screen. The graphical tools are some of the most interactive we have reviewed so far and
the process looks to be extremely quick and easy to undertake.
Following this stage, the adviser can then enter the action section of the tool where they can adjust
the client’s portfolio, buying and selling funds to balance the portfolio as appropriate.
When the adviser is ready to execute the plan a snapshot version is produced and a list of
transactions is created. The adviser can then commit to the changes and their back-office
information is updated accordingly. This level of process improvement would need two-way
integration in other solutions to ensure everything is in sync – here, because you are working from a
single platform they are in sync by default.
th
IntelliFlo’s
Planning tools
are graphical
and
professional in
their look and
feel.
IntelliF
lo’s launch into this market is welcome as it offers a more ‘holistic’ solution superset and although
the functionality is currently limited compared to the leading financial planning tools. However, it
does what it does very well. The logical extension of their entry to the market is to provide a
broader set of tools including a cash flow planning capability. The effect of IntelliFlo’s entry and
integrated approach will put pressure on other technology providers to look at how they deliver
planning tools from within their solutions or through integration with other specialist planning
providers.
th
9. Focus
Regular readers will know we have been exploring a range of financial planning tools available on the
market, looking how they can help advisers with the demands of RDR or increased professionalism
and fee based planning. Readers may also be aware of my preference for solutions that are
integrated into an adviser’s infrastructure rather than acting as standalone tools into which an
adviser or their administrator has to rekey a set of data they already possess. With this in mind, I
was looking forward to reviewing the new tools provided by Focus Solutions.
I should start by positioning Focus correctly. They are not a mass market product supplier, rather,
they specialise in selling systems to the enterprise marketplace. These implementations tend to
require a substantial set of configuration and customisation services to integrate the tools into the
overall processes of the distributor. With this business model in place they have been effective in
supplying a number of large banks (including Barclays, HSBC and Bank of Ireland) and Tied Agents or
Networks (such as Towergate and St James’s Place), but haven’t yet really penetrated the sub 50
adviser market. Nevertheless, I felt it important that readers of all shapes and sizes were aware of
their solutions, as I suspect their solutions will become more commoditised and be made available
to the wider market in the near future.
Focus’ background has until now also been focused on the provision of Point of Sale (POS) solutions
which have been well regarded by users, but limited in their breadth of coverage. However, their
current solution - ‘focus:360°’ - has a much broader range of functionality and reach. It is aimed at
what is becoming known as a ‘Whole of Office’ solution covering the traditional front office tasks,
such as factfinding, financial planning, quotations and applications, but is adding the areas the back
office suppliers provide, such as commissions, valuations, contact management, lead management
and training & competence.
The solution operates both on and offline enabling it to be used in front of clients without the need
to be connected to the internet – something that is still important in some adviser circles.
When first looking at the system, its heritage of POS systems is clear. The solution is designed with a
simple and effective user interface which gives a different user experience to some of the competing
systems that incorporate the use of multiple windows opening and closing as you move through a
process. The fact finding is very comprehensive, covering areas right down to the details around the
power of attorney. It has its own tax calculator which looks to be sufficiently thorough for many
advisers needs and it is graphically quite rich.
th
The 360°
tools are
pleasing in
their
appearance
It has a built-in Attitude to Risk (ATR) calculator which can be run at a general client level, at need
area level or at specific individual goal item (e.g. school fees, or saving for a yacht). In the version we
saw demonstrated, it had an ATR Questionnaire based on Towers Perrin, but this is an optional extra
as is Barrie and Hibbert and both options would usually need to be separately commercially
rewarded. Alternatively, the tool has an application interface that enables the customer to add their
own ATR questionnaire and methodology.
The needs analysis tools themselves are pretty impressive. The range of need areas covered is
comprehensive; from investments, protection, pensions, and mortgages right through to long-term-
care.
They have a fresh and innovative way of presenting the comparison of target portfolios and current
positions. The graphical representation of the investment split for the current portfolio is shown by
an ‘inside’ ring with an ‘outer’ ring showing the target portfolio. In the example I saw, it made the
comparisons very clear.
The ‘What if’ functionality is better than the others that I have seen; building-up scenarios either as a
whole plan or as an individual need area is explored. A snapshot of each scenario event is stored
and can then by assessed and compared by ticking to select each scenario event. The effect can be
seen on the screen refresh and this interactive investigation of a client’s need is impressive and
effective.
th
The “what if ?”
presentation is
clear and
effective
It is worth noting that the focus:360° platform also supports a corporate fact find and needs analysis
process.
The depth of the tool is good, but it raises an issue of how important good training is, if advisers are
to take full advantage of the solution. Companies like Prestwood, who have systems of similar or
arguably greater depth have turned such training into an art and is a part of their business revenue
model. Focus, do not as yet, have such services on offer. The Corporate clients will have their own
training departments and this should remove this issue. However, small players will not, and the
potential training need could move the system further out of reach of the small to medium adviser
firms. Indeed the big issue with this offering is not the functionality demonstrated, but the
accessibility of it to the mass market. The fact that it needs so much effort to tailor, integrate and
implement puts it out of reach of many. However if Focus can package this effectively for the SME
market, then we believe that they have a really useful tool to help advisers get ready for the post
RDR world.
th
th
10. 1st The Exchange
I have written much over the past weeks about the importance of financial planning tools and the
importance of having these tools integrated to other systems that IFAs use. With this in mind I was
delight to see 1st The Exchange the IT company with the largest installed user base of Back-office
systems is launching a new suit of products aimed at the providing a more holistic financial planning
suite of products.
It has to be said that 1st The Exchange have had some financial planning functionality in their
established system Adviser Office for some time. These tools are not the most graphical or
sophisticated but they have ensured that the company as learnt about this market space and help
prepare the ground for a grander suite of products integrated into their newer point of sale solution
Adviser Evolution.
Before discussing the financial planning tools themselves it is worth a few words on Adviser
Evolution. Evo, as you will hear the 1st The Exchange refer to the systems as, is a massive step
forward from Adviser Office, launching them as a major player in the front office. Until now their
front office presence has been a based on a number of tools hidden in a wealth of other
functionality in Adviser office. Evo brings these tools to the fore but with a fresh, modern and most
importantly friendly user interface. It is possible to customise Evo substantially and to get close to
the process and branding the user requires.
Evo is primarily a front office tool though and while it has more functionality than many Point of Sale
tools it is important to understand that it doesn’t yet provide the full functionality of Adviser Office
and key ‘back office’ tasks like commission management and valuations are not part of the system.
This isn’t necessarily a problem as Evo doesn’t claim to be a back office but is important that
purchasers understand what they are buying with Evo. However more of a concern to me is Evo is
not a Web application and requires a client install which for me brings with it the headache of
managing an infrastructure and a lack of accessibility from computers that don’t have the
application on.
With Evo being a front office tool it is not surprising to see 1st The Exchange announce plans to add
planning tools to the product roadmap. These tools are not available yet so are difficult to review in
full (as a result we haven’t included our normal comparative table) but 1st The Exchange have shared
their plans and early developments with us and the solution is looking very exciting.
The tools will be based on the Towers Perrin Engine which, we have written about previously and
endorse as a sound engine to drive any tool set. It contains 3 core areas: Financial planning (setting
objectives), Wealth management (monitoring and reporting) and Execution (trades and
investments). It also uses the Towers Perrin Risk Profiler based on 8 questions, with the creation of
bespoke risk profilers also being possible.
They plan to cover Retirement, Protection, School fees, specific goals, Debt consolidation a,
mortgage and GI, Tax calculators and Investment (the only real gaps being Estate p and CGT
planning).
They plan to have the ability to both drive through a streamline need without having to a undergo
the full time consuming planning session and to support a full cashflow analysis with the portfolio
balancing/asset allocation based on the Towers Perrin Stochastic model.
th
The launch date is yet to be confirmed but we believe they will launch the first version in early
autumn. We wait to see what level of functionality is in that release but from the preview we have
seen it looks promising.
th
11. ShareScope
Having written included reviews on the leading financial planning tools we thought we would include
something slightly different from company called ShareScope who produce their Alpha Terminal.
Alpha Terminal has the sort of investment analysis solution that I would previously have associated
with the stockbroker market, but they have turned some of their focus and marketing toward the
top end IFA market and are having some success. They have secured a number of IFA clients,
including Charterhouse, Greystone and Hargreaves Lansdown.
There are three types of data which the system provides. First, it provides price data for equities,
global indices, collectives, commodities and foreign exchange. Second, it provides Company
Fundamentals – P&L, Market Cap, PE ratios etc. Third, it provides a live news feed from Dow Jones
Newswires, which includes all RNS announcements.
Alpha Terminal covers equities and Collective Investments such as Investment and Unit Trust funds
as well as ETFs. It enables advisers to analyse very quickly performance data in a number of ways
along with an impressive graphing capability to produce a shortlist of the most attractive investment
vehicles in a sector.
For example, with more and more people using ETFs for low-cost index tracking, and access to other
asset classes such as commodities, the ability to compare rapidly the relative performance and costs
of these passive trackers against the more expensive managed alternatives would seem to be a
useful tool. For example, over the last three years, the iShares FTSE Xinhua 25 ETF has performed as
well as the impressive First State funds. The company says that reducing the time it takes to produce
a reliable shortlist provides the adviser with more time to make a considered decision.
Alpha Terminal extends beyond simple pricing information and covers the full order book. The order
book access doesn’t simply list all outstanding orders with their buy and sell price points, but will
also provide a graphical aid to show at which pricing levels there is most support for the stock, along
with the expected transaction volumes and so equip an adviser to recommend the most appropriate
entry or exit point for their customers .
What makes the system interesting isn’t just the data itself but the powerful analysis capabilities it
has. It includes powerful stock screening in order to find companies which match specific
investment strategies (e.g. companies with high yields or strong cash flow etc) and then charting
these to analyse trends and ‘indicators’ such as moving averages. The analysis and graphs can be
compiled into individual client reports or internal research documents.
Seeing an experienced analyst use the software is incredibly impressive, if not a little frightening for
the uninitiated. Trends can be quickly spotted so stocks and funds can be easily evaluated and
prioritised. As a lay-person watching it, it almost seemed unfair to provide some people with such
insight into the price movements and order triggers (and set alarms) whilst others are left in the
dark. However, despite claims of a high level of focus on usability I found the navigation of the
system quiet confusing and the high speed of the demo left me a little dizzy – though this may say
more about me! ShareScope claim users like the navigation once they have been shown how to use
it as it is extremely fast and enables the user to switch between data sets very quickly. I was also left
with the impression that as powerful as the tool seemed, if it was used in the wrong hands, it could
be quite dangerous.
th
The product feels like Bloomberg in many ways, but it lacks a trading platform. However, it doesn’t
come with a Bloomberg price tag. The product retails at £100 per month per user and it has its
sights clearly set at the tier below Bloomberg taking on Proquote and potentially moving into
Fidessa’s territory.
What isn’t clear to me is how many IFAs will actually need this level of functionality. I have no doubt
as to the benefits of the tool and price point is surprisingly good, but I feel that the number of IFA’s
that will be able to use the power it professes is probably relatively small at the moment. The most
likely target is IFAs who are active in the Discretionary fund management space, though I suspect
that as the industry moves to towards fees and higher professional standards an increasing number
of IFAs may then be attracted to use Alpha Terminal. The company provide a free trial of the
system and if bought also offer one-to-one training included in the contract price. I recommend
taking a look, even if only out of curiosity, but be prepared for a headache afterwards because there
is a lot to take in.
th
12. The tools behind the scenes
During the reviews of planning tools that we have carried out, there has been no doubt in my mind
that these tools are valuable and will help distributors move to the brave new world of the ‘model
adviser’. However, these tools do not come free of charge and in some cases have a reasonably
chunky price tag. Therefore, it is unsurprising that in a recent survey by threesixty, the largest
source of financial planning, asset allocation and portfolio management tools were not the tool
providers themselves, but were the product providers and platforms that incorporate varying
degrees of this functionality in their own technology offerings free of charge.
The product provider tools themselves, are often built by some of the leading financial planning
technology companies. Some of the companies offer the standalone tools we have already
reviewed, like Dynamic Planner and Morningstar, others are powered by some of the stochastic
models from vendors like Barrie & Hibbert or Towers Perrin.
So, if it’s free, does it matter to the end user whose ‘engine is powering the tool’? Well potentially
yes. The type of tools used will affect the risk assessment, portfolio construction and rebalancing for
end customers, so it is important that the tools used have a credible stochastic model backing them
up. In the same way when buying a PC, you get comfort from knowing it has the ‘Intel Inside’ badge,
using provider tools backed by a reputable and proven financial model can provide the adviser with
the same feeling of comfort that their advice is founded on an acknowledged robust and trustworthy
model.
So which engines are being used as the ‘Intel inside’ and can we rely on them? From our reviews so
far, there are four key brands that are being used in this way.
Barrie & Hibbert (B&H) are in many ways a well kept secret. Previously they marketed their own
tool-set under the ‘Decision Decisions’ brand, but withdrew this brand in 2007 leaving many a little
confused as to B&H’s market proposition. In reality, they have simply separated their financial
models and consultancy from their IT solution. They now play purely in the ‘Intel Inside’ space,
focusing on their core strength – the robustness of their stochastic model and its application in the
financial planning process.
On closer examination, what is surprising about B&H is their market penetration. B&H say that
almost every major Insurance provider in the UK now uses them to assess their own risk exposure
and to design their own products. Excitingly for B&H this success is now also being mirrored in the
US and Europe where they have signed 15 of the top 20 insurance providers since they launched 18
months ago. The logical next step is for these providers to use the same financial models and
market assumptions in the tools they provide via their extranets. Scottish Widows and Aviva are two
companies that have adopted this approach. B&H no longer provide the full package including the
user interface, but they partner instead with companies like Focus, FNZ and Capita to deliver their
modelling capability should an end client require them.
Towers Perrin (TP) adopts a similar approach and whilst their client list may not be as exhaustive as
that claimed by B&H, they are backed by one of the leading actuarial firms. This brings with it the
rigour you might expect along with a corporate stability beyond the reach of some of their rivals.
Their client base is again impressive including the likes of Standard Life and they also partner with
the major technology solution providers to provide a holistic solution. TP have avoided the legacy
of potential conflict over having their own front end and have had greater success in working with
the technology vendors, including 1st Software, IntelliFlo and Focus.
th
Distribution Technology’s Dynamic Planner is also powering a number of the major extranets and
platforms, including Cofunds and AEGON Scottish Equitable. Unlike B&H and TTP, Distribution
Technology provides a complete solution including the front-end. Their approach will appeal to
companies wanting to buy from a single vendor. In addition, the user interface look and feel is
appealing and well liked in the industry. While their asset model may not be viewed by some as
having the same proof points as their main rivals, it is used by many (including, we understand, the
FSA).
Morningstar has a strong position in the investment space and is backed by the well thought of
’Ibbotson Model’. Morningstar provide a very comprehensive end-to-end solution for investment
business and their tools can be found on several platforms including Cofunds and Transact.
As RDIP progresses, Financial Planning tools are likely to become more and more important to
advisers. Many will invest in buying their own systems, but cost pressures or the fact there are not
frequent users of such systems will cause some users to continue to rely on the facilities on
Provider’s extranets, Platforms or embedded in third party systems such as back-office solutions
(which we will be reviewing over the coming weeks). Differentiating between these solutions will
depend greatly on the vision of the companies owning the technology platforms, but do not
underestimate the importance of a strong financial model behind these solutions – a building is only
as strong as the foundations it is built upon.
th

Null

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Null

Hochgeladen von

Copyright:

Verfügbare Formate

Financial Planning tools

Authors: Mark Loosmore

Life Goals – the entry

Life Goals reports are

Truth uses a clear

Das könnte Ihnen auch gefallen